Management Accounting is a profession that involves partnering in management decisions making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization strategy.
Budgeting is one of important management accounting aspects. Budgeting involves in preparing a budget. It is a most common and best tool in management accounting practice. A budget is one of best tools for reaching goals everyone can benefit from a budget. It’s not just for people who are having trouble making ends meet. Today there are many different approaches to budgeting such as Incremental Budgeting, Zero Based Budgeting, Programme Budgeting, Activity Based Budgeting and Kaizen Budgeting. The company can use whatever Budgeting approach which is most suitable & accurate for their budgeting purposes.
What’s budget?
An estimate of costs, revenues and resources over a specified period, reflecting a reading of future financial conditions and goals. One of the most important administrative tools, a budget serves also as
• A plan of action for achieving quantified objectives
• Standard for measuring performance
• Device for coping, with foreseeable adverse situations.
Firms are preparing budgets for various purposes and those can be varied from one to another. There are several purposes of budgets. Therefore Budgets can be used for,
1. Planning
2. Coordination
3. Communication
4. resource allocation
5. Performance evaluation
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